Neighbor Storage Host Taxes: Passive Income, Schedule E, and What You Owe

Q: Is storage rental income Schedule E or Schedule C?

Schedule E for most Neighbor hosts. Renting space (a garage, basement, driveway, or storage unit) is passive rental income — no self-employment tax. Schedule C would apply only if you provide substantial services to renters, which is unusual for storage. Neighbor's own model is explicitly passive — hosts provide space, not labor.

Q: Can I deduct a portion of my mortgage or rent for the storage space?

If you own your home, you can deduct the rental-percentage of mortgage interest, property taxes, utilities, and insurance — calculated by the square footage of the storage space as a fraction of total home square footage. If you rent your home, you can deduct the proportional rent. Keep records of the space dimensions and any shared utilities.

Q: What if my storage space is my garage — how does mixed use work?

If you also park your car in the garage or use part of it personally, the storage rental deduction applies only to the portion actually rented to tenants. Document the square footage dedicated to Neighbor storage vs. personal use. The rental-portion expenses (utilities, insurance, depreciation on the structure) are deductible proportionally.

Neighbor storage host tax guide — passive income, Schedule E, garage and basement rentals

Key questions this guide answers

Does Neighbor.com send a 1099-K, and at what threshold?
Is storage rental income reported on Schedule E or Schedule C?
Can I deduct a portion of my mortgage, utilities, or insurance for the storage space?
What if my "storage space" is my garage — how does mixed use work?
Do I owe self-employment tax on Neighbor income?
What's the difference between renting a detached structure vs part of your home?

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Frequently asked questions

Does Neighbor.com send a 1099-K?

Yes. Neighbor processes payments and issues a 1099-K to hosts who exceed the federal $2,500 gross-payments threshold for 2025. Neighbor's service fee is deducted from payouts but owed tax is on gross rental amounts. Deduct the fee as a rental expense on Schedule E.

Is storage rental income Schedule E or Schedule C?

Schedule E for most Neighbor hosts. Renting space is passive rental income — no self-employment tax. Schedule C would apply only if you provide active services to renters (loading, organizing, transport), which is unusual for standard storage-space rental.

Can I deduct a portion of my mortgage or rent for the storage space?

Yes. Calculate the storage area as a percentage of total home square footage. That percentage of mortgage interest (owners), rent (renters), property taxes, utilities, and insurance is deductible as a rental expense on Schedule E.

What if my storage space is my garage — how does mixed use work?

If you also use the garage personally (parking, your own storage), deduct only the fraction of the garage actually rented. Document the rented area's dimensions and keep photos. Shared-access arrangements are harder to defend in an audit than a clearly demarcated exclusive-use area.

Do I owe self-employment tax on Neighbor income?

No, in most cases. Schedule E income is passive — not subject to the 15.3% self-employment tax. SE tax would apply only if you actively manage renters' belongings as a service, which crosses into commercial storage operations.

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Neighbor storage host taxes — passive income, Schedule E, and what you owe